Before becoming a student at Harvard Business School, Henri Pierre-Jacques had worked at ICV Partners, one of the few black-owned private equity firms in the country. In 2018, as recruiters descended on campus, Pierre-Jacques came to a sudden realization: He didn't want to work for a non-minority-owned private equity fund. That left him with very few choices.
So instead of taking a job working for someone else, Pierre-Jacques ultimately decided to dedicate himself to a side business he had started. In 2015, along with friends and former colleagues Jarrid Tingle and Brandon Bryant, he launched Harlem Capital Partners, an angel investing syndicate based in New York City. Having more black investors accessible might give rise to more black entrepreneurs, they figured, so by early 2017 the group had pivoted to invest in people of color and women. They also added John Henry, an entrepreneur and the host of the Viceland show Hustle, to the team.
The partners realized they had only so much capital they could personally invest. With Pierre-Jacques and Tingle still enrolled at Harvard--from which they'll graduate this spring--they started raising outside money and committed themselves to investing full-time. By April 2019, they had closed on $7.5 million of what they hope will be a $25 million fund. But Harlem Capital's founders have a much bigger goal for the future: to change the face of entrepreneurship by investing in 1,000 black, Latino, and women entrepreneurs within 20 years. Three years after their current fund closes, they hope to be operating a $100 million fund, and in 10 years, a billion-dollar fund.
In 2018, women CEOs got only 2.3 percent of venture capital. People of color got even less. Harlem Capital put together a report that identified 105 entrepreneurs of color who had raised at least $1 million, for a total of $2.7 billion. But those raises took place over a number of years, and venture capital is a $100 billion industry, making the percentages tiny.
Depending on your point of view, that means Harlem Capital is either up against some intractable societal forces, or is primed to take advantage of some low-hanging fruit. Other funds, including the Intel Capital Diversity Fund and Rethink Impact, also see an opportunity in going after these underserved groups of entrepreneurs. Either way, Harlem Capital's founders believe that diversifying the faces of fast-growth entrepreneurship means diversifying the people who invest in entrepreneurs. "Until you have women and minorities creating their own funds," says Pierre-Jacques, "we don't believe real change will happen any time soon."
No entrepreneurial experience necessary.
Among Harlem Capital's founders, only Henry has experience as an entrepreneur. But it's not an issue that concerns them. "Everyone says you should be an operator first, to be an investor," says Pierre-Jacques. "Think of all the billionaire investors. None of them have ever been operators. For some reason, people think venture capital is a unique asset class."
That's a viewpoint that seems to resonate well with prospective limited partners, many of whom also come from the world of finance. "You don't have to have been in that operator seat," says one of Harlem Capital's LPs, who declined to be named in this article. "They'll rely on a good network of people, and Jarrid and Henri and their partners are surrounding themselves with the best in the industry." As for the entrepreneurs leading Harlem Capital's portfolio companies, Pierre-Jacques says, "they honestly don't care" about operational experience.
It certainly wasn't an issue for Claire Coder, the founder of Aunt Flow, which became Harlem Capital's first portfolio company in January. Aunt Flow provides workplaces and institutions with tampons and menstrual pads that are provided to women for free, rather than through coin-operated dispensers that often are empty. So far, Aunt Flow is one of four Harlem Capital companies.
Coder says that when she was closing her $1.5 million round, Harlem Capital, which took the lead, "was very helpful in making sure I didn't get screwed over as a founder." Her lawyer had drafted the term sheet, and the other investors were fine with it. It was Harlem Capital, she says, that told her, "I don't know if you read this way you should have. Let's make some updates to make sure your company is in a good position for this round and the next." It was Harlem Capital that insisted she pay herself, that she put in place a plan to work out three times a week and see friends once a week. "It wasn't, 'Here's some money, bye!'" she says. "It was a holistic improvement. They asked me if I was improving as a human."
Coder says she has met plenty of would-be investors who talk the talk about women entrepreneurs or about diversity. But, she says, "What I love about Harlem Capital is they are really committed."